We cannot exist in a realm where someone establishes a venture that is entirely lawful, only for them to subsequently [] be sanctioned [] and embargoed by the United States government through a distinctly unaccountable [procedure], by the way. No due process. None of this is documented. There are no guidelines. There’s no court, there’s no decision-making process. There’s no right to appeal. Who do you appeal to, correct? [] Where do you turn to in order to retrieve your bank account?
— Marc Andreessen, addressing Joe Rogan, posted on 11/26/2024
In yet another alarming episode of “Chokepoint 2.0,” a Wyoming firm was swiftly debanked in early November 2024, by Mercury, a financial platform operated alongside Evolve Bank (and additional banking associates). Following years of uninterrupted operations and exceptional service, Mercury abruptly ceased the account without clear justification. The rationale? An ambiguous reference to “internal factors” that remain just as unclear as the regulatory pressures likely influencing them.
Let us be straightforward: The company’s banking operations were uncontentious. The only possible transgression is that the firm receives a considerable share of its client payments in Bitcoin. Aside from periodic transfers from Kraken (a regulated cryptocurrency exchange), its transactions encompassed rent, utility bills, hardware store purchases, and subcontractor invoices.
The account closure could not possibly relate to reckless conduct or fiscal wrongdoing. Rather, the termination symbolizes a systemic initiative to cripple Bitcoin enterprises by exploiting the centralized banking choke points that regulators have turned into instruments of suppression.
This exemplifies Chokepoint 2.0 in operation. Regulators have discovered fresh methods to suppress industries they oppose—this time, zeroing in on Bitcoin miners and enterprises. Rather than engaging in legislative discourse or due process, unelected officials utilize their oversight of financial institutions to nudge them into “de-risking” clients involved in entirely lawful activities. The firm was merely collateral damage in the operation to marginalize Bitcoin from the conventional financial framework.
This resonates ominously with Operation Chokepoint 1.0, wherein federal regulators unlawfully coerced banks to terminate services to legal but unfavored sectors, such as firearm vendors and payday loan providers. That initiative concluded in disgrace when the FDIC had to settle a lawsuit in 2019. The settlement affirmed what should have been apparent: utilizing the financial system against legal enterprises violates constitutional principles. Regulators are aware of this—and yet here we are once more.
Significance of This Issue
Debanking goes beyond mere inconvenience. For businesses, it poses an existential threat. Functioning without a dependable banking ally in today’s economy is akin to trying to breathe without oxygen. When banks are pressured into cutting ties with Bitcoin-related firms, it conveys a chilling warning: immerse yourself in this sector at your risk. It also represses innovation, setting a hazardous precedent for a nation rooted in economic freedom.
Additionally, this practice undermines the fundamental principle of equity in financial services. The American banking system is not a private domain. It operates under public charters and with public trust, and its gatekeepers should not function as judges of political or ideological purity.
The impact reaches far beyond Bitcoin. If regulators can stifle this sector, what prevents them from pursuing others? What occurs when innovation, dissent, or uncomfortable truths are categorized as “too hazardous” for the comfort of established powers? This issue transcends Bitcoin—it concerns the integrity of the financial system and the preservation of free markets.
A Plea for Action: Responsibility for Regulators
The new Congress and Trump administration must grasp this moment to hold the creators of Chokepoint 2.0 accountable. This is not a partisan concern; it’s a constitutional issue. Regulators acting as de facto legislators, imposing policies that would never endure public scrutiny, must be curtailed.
- Investigations into Regulatory Overreach
The Congress is compelled to initiate thorough investigations into the agencies pressuring banks to sever ties with Bitcoin businesses. Who issued these directives? Under what authority? The American populace deserves answers, and the accountable individuals require consequences.
- Personal Accountability for Regulators
Bureaucrats who misuse their authority should not be shielded by the anonymity of the regulatory apparatus. Those complicit in weaponizing the financial system against lawful businesses must be publicly identified, disgraced, and removed from their roles, permanently stripped of any security clearances they may possess, and potentially lose their government pensions and retirement benefits.
- Restoration of Due Process
Any decisions to limit banking access must necessitate explicit, codified standards and a transparent appeals procedure. No more clandestine rules. If a business is to be debanked, the justifications should be public, defendable, clearly articulated & defined, grounded in law, and open to appeal.
- Legislation to Safeguard Financial Access
The Congress should enact laws forbidding banks from discriminating against lawful sectors based on political or ideological grounds. The free market flourishes on neutrality; it diminishes under favoritism.
- Decentralization of Financial Systems
Bitcoin stands as a safeguard against precisely this kind of overreach. Policymakers should welcome and promote its expansion, rather than resist it. America cannot afford to lag behind in the global quest for financial advancement.
Much of the above could be resolved through Section 10 of the SAFER Banking Act, which directly curtails undue regulatory influence over banking services. Specifically, it prohibits federal banking agencies from coercing financial institutions to terminate connections with lawful enterprises, including those in the Bitcoin and cryptocurrency sector, based on reputational risks or political motives. This provision reinforces the notion that choices regarding financial services should depend on risk-based assessments of individual accounts rather than blanket biases against entire sectors. By enshrining such protections, the SAFER Banking Act would foster fairness and transparency in financial services, ensuring that regulators fulfill their responsibilities of impartial supervision while respecting the rights of businesses operating within legal frameworks at both state and federal levels.
In addition to legislative remedies, the existence of even one bank willing and able to resist undue regulatory pressure could significantly transform the financial environment for Bitcoin enterprises. Caitlin Long’s Custodia Bank, situated in Wyoming, exemplifies this potential. Custodia has consistently showcased its commitment to legal operations while contesting the overreach of federal regulators, as demonstrated in its lawsuit against the Federal Reserve.
A bank exhibiting this level of determination, having direct access to the Federal Reserve itself and a proven history of opposing regulators, will provide a crucial resource for Bitcoin (and other) businesses seeking dependable financial services. By nurturing an environment where legal enterprises can flourish without the dread of arbitrary debanking, Custodia Bank presents a blueprint for how other institutions can operate.
might imitate, guaranteeing that creativity and economic liberty stay safeguarded.1
When considered collectively, the SAFER Banking Act and the determination of organizations like Custodia Bank symbolize two essential battlegrounds in combating financial inequity. While the SAFER Act establishes a legal structure aimed at limiting regulatory overreach and shielding legitimate enterprises from debanking, it has encountered considerable opposition, having been proposed numerous times in Congress only to be obstructed repeatedly. Simultaneously, Custodia Bank’s plight highlights the extent of institutional animosity; the Federal Reserve’s refusal to permit Custodia entry to the banking sector compelled the bank to initiate a federal lawsuit merely to assert its rightful position within the financial landscape. These obstacles expose the deep-rooted resistance to reform, yet they also underline the pressing necessity for a comprehensive approach—legislative, judicial, and entrepreneurial—to guarantee equitable and unbiased access to banking services for all legitimate businesses.
Bitcoiners: The Vanguard of Freedom
Bitcoin transcends mere currency; it embodies a principle—one that asserts that wealth and authority rightfully belong to the populace, not the government. This is our purpose. This is the essence of Bitcoin’s existence. The traditional financial system is faltering under its corruption, and each act of suppression only accentuates the demand for decentralized alternatives.
Let me be clear, I don’t completely hold Mercury and Evolve accountable for this. They are probably being compelled to act in this manner by their regulatory bodies.2 Indeed, owing to the Orwellian Bank Secrecy Act, the banks are prohibited from revealing the reasons behind these actions to the impacted customers. Financial institutions like Mercury, along with any others who have voluntarily partnered with Chokepoint 2.0, ought to be subjected to Congressional Subpoenas to justify their actions, while also exposing the regulators who manipulated them.
The future of Bitcoin—and America’s position as a frontrunner in innovation—hinges on unveiling and dismantling Chokepoint 2.0, and ensuring accountability for all those involved.
1 Certainly, Custodia Bank having a master account doesn’t eradicate the possibility of governmental censorship, but it does compel such actions to be straightforward and transparent, rather than the indirect, concealed, and unchallengeable pathways regulators can currently pursue. Refer to this x-post by Caitlin Long.
2 Another indication that, in the instances of Mercury and Evolve, the responsibility lies with the regulators, is that Evolve Bank faced penalties in June 2024 from the Federal Reserve, likely forcing them into these actions as a result of that punitive measure.
This is a guest contribution by Colin Crossman. The views expressed are solely his own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.